The industry is growing at a rapid rate, and maybe as fast as ever. While there is heavy interest from private equity firms investing in the industry fueling mergers and acquisitions activity, some landscapers are also growing organically without that backing.
The Lawn & Landscape Business Builders Summit will cover both avenues to growth and everything in between. Here’s a preview of the five panels that will take place May 22-23 in Nashville.
Visit www.llbusinessbuilderssummit.com to learn more about the event.
Getting ready to sell
Selling the business can be a sensitive subject for some company owners. But that may be the decision an owner makes down the line, and now is as good as time as any to start planning.
“Landscaping is a labor-driven business, and a buyer is really focused on buying two things: employees and customers,” says Tom Heaviland, CEO of Verde Property Services in California. Heaviland sold his company, Heaviland Enterprises, to BrightView in 2019 and stayed on for a bit working in the company’s M&A department.
Preparing your company for a deal is a detailed process.
“Don't be misled; selling your company takes a great deal of effort,” Heaviland says. “A lot of hard work on both the seller and buyer side goes into getting the deal across the finish line. From an Indication of Interest, to a Letter of Intent, to data upload and due diligence, to signing of documents, there are a lot of layers and steps needed to get to a final close date.”
Heaviland says the sooner you start preparing, the better.
“Focus on retention and tenure by providing above market compensation and benefits packages, practicing open book management and building a culture of collaboration and teamwork,” he says. “I don't know about you, but that sounds like a great company to buy.”
Culture component
It’s hard enough to develop and maintain a culture and identity in a slow-growing company. But throw in the chaos that comes with rapid growth, and you have to work that much harder to maintain the culture of your organization.
Brad Stephenson, CEO of New Castle Lawn & Landscape in Pennsylvania, says a key to keeping your established culture from eroding as you grow, is using the company’s core values when hiring. New Castle grew 65% from 2018 to 2021, and he says culture has been a main reason for that success.
“Our new hires need to Care, they need to want to Improve along with having a good Attitude,” he says. “We call this CIA. One bad person could bring the entire ship down.”
“Landscaping is a labor-driven business, and a buyer is really focused on buying two things: employees and customers.”
—Tom Heaviland, CEO, Verde Property Services
Branching out
With revenue growth comes the possibilities of opening new locations. Sullivan Landscaping in Delaware has three branches and the company’s vice president, Joel Sullivan, says you need to have a good grasp of your numbers if you are considering a new location. Sullivan won a large contract to help with the opening of his first location, and if they hadn’t, things could have gotten messy.
“Although luck was on our side, what we wish we knew is that we should never start a new branch with less than $1 million in annual revenue and then scale it up to $3 million as quickly as possible,” Joel Sullivan says. “We were fortunate that this particular contract amount was substantial enough to get things moving.”
Because Sullivan was starting from scratch with the new branch, he also underestimated the work it would take to become functional. There was no electricity, no gas tanks, no fence around the yard, no crew members, no … you get the point.
“We spent the first year becoming fully functional, although we operated from the first day as if we were,” he says. “We were so excited, so full of optimism, so full of confidence that we didn’t realize the immense undertaking that opening a branch from a piece of farmland would be.”
Private equity 101
Investors from outside of the industry continue to show strong interest in landscaping. Bob Grover, CEO of Pacific Landscape Management in Oregon, sold to a private equity firm in 2021. He says that while the firms goal is to increase the value of the company, they are also there to support the company.
“They have helped us and encouraged us to develop a more sophisticated back office sales system and fleet management,” Grover says. “They are helping us grow up as a professional business beyond our landscape service.”
If your business is strong enough to have interest from private equity firm, there is a good chance that the leader is very strong-willed and will have the final say on decisions. But that changes when selling.
“We all love advice and get it from each other, but when you take on a partner, their opinion carries more weight than the opinion of a peer or consultant,” Grover says.
“All have vast experience working with entrepreneurial businesses, and us strong-willed entrepreneurs need to open ourselves up to feedback and challenge of our partner. Sometimes these challenges are hard to accept, but all of them are well meaning to help our business expand and improve. But sometimes the truth is hard to hear.”
The organic route
Some companies like to focus on good ol’ fashioned organic growth. That can prove challenging, but one way to get more customers is by marketing, which has worked for Marcus Celiano, president and CEO of Golden Wolf Landscape & Design in New Jersey.
“Myself, along with the marketing team, were able to develop a system to reverse-engineer our marketing plan based off our KPI's we track,” Celiano says. “By that, I mean you can confidently plan to achieve X in revenue if you spend Y in marketing because you know your cost per lead, closing percentage and average ticket per service/division.”
Celiano was able to figure the formula out early in the business’ existence.
“A lot of companies look at marketing as an expense, which it is, don't get me wrong, you do have to pay for it, but being able to leverage that expense to confidently generate an ROI is one of the things that I did to help with growth,” he says.
“I look at marketing and the corresponding KPI's as a slot machine,” he adds. “You put X in, then pull the lever and you will get Y in return. That can only be done because we had a plan to be confident in putting in X to begin with.”
Explore the April 2024 Issue
Check out more from this issue and find your next story to read.
